Yield is set to outperform quality and growth according to HSBC’s European equity research team. In a note issued to equity research clients on Wednesday and reviewed by ValueWalk, HSBC suggests that European high yield equities will benefit from falling bond yields over the next few months. According to HSBC’s fixed income research team, Bund yields will fall to 0.2% next year, which will increase the demand for high yield equities among investors. Other styles may also outperform as bond yields fall, but HSBC prefers yield as valuation risks are lower. The price to book relative of high yield sectors is at an 18% discount to its 20- year average. This is in contrast to growth and quality for which valuations are more stretched than they have been at any point over the past two decades.
Based on historic trends, it looks as if HSBC’s preference for yield over other strategies has some weight behind it. Indeed, on the last two occasions bond yields fell significantly, (between June and September 2011 when bond yields fell from above 3% to below 2%, and between December 2013 and March 2015 when bond yields fell from 1.9% to 0.2%) high yield equities outperformed. Valuations also support a preference for high yield equities. The price to book relative and PE relatives for high yield are below their long-term averages, and the universe of yield stocks covers a broad range of sectors.
Source: Value Walk
Related Articles:
- Finding Low Risk Dividend Stocks
- 10 Fun Facts That You Might Not Know About Microsoft
- 5 Dividend Stocks To Beat The Wall Street Giants
- A Disciplined Approach To Dividend Growth Stocks
- 5 Low Beta, Higher Yielding Dividend Stocks For The Next Downturn
HSBC: Buy European Dividend Stocks As Valuations And Bond Yields Decrease
Posted by D4L | Saturday, November 21, 2015 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
Owning dividend stocks can be a great way to both generate cash flow and beat the market long term. And if you can find stocks that are over...
-
Long-time readers know I’m a big fan of the insurance industry because of one quirk in their business model. Customers always pay premiums u...
-
I wanted to find an ideal list of stocks with high dividend yields. The stocks would have to be cheap as well. And the dividends would have ...
-
In this series, we look through the most recent Dividend Channel ''DividendRank'' report, and then we cherry pick only those...
-
It has been a glum time for ExxonMobil (NYSE:XOM) shareholders. Regardless of whether you’re looking at the past one year, five years, or te...
-
Investors tend to gravitate to dividend stocks, particularly when those equities increase their payout on an annual basis. When these types ...
-
“Cheap” stocks aren’t necessarily the best cheap stocks to buy. And dividend stocks, even those with a high payout, aren’t necessarily safe....
-
This company's management has raised the quarterly distribution 71 straight quarters, 22 straight years - it will be a Dividend Aristocr...
-
Dividend-paying companies are beacons of profitability. Generally speaking, a company isn't going to share a percentage of its profit or...
-
The markets have been doing very well over the past several weeks, and finding some good bargains has been a bit challenging of late. Howeve...

0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.